Correlation Between Flow Traders and Gfinity PLC

Can any of the company-specific risk be diversified away by investing in both Flow Traders and Gfinity PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Flow Traders and Gfinity PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flow Traders NV and Gfinity PLC, you can compare the effects of market volatilities on Flow Traders and Gfinity PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Flow Traders with a short position of Gfinity PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Traders and Gfinity PLC.

Diversification Opportunities for Flow Traders and Gfinity PLC

0.06

Correlation Coefficient

Flow Traders  Gfinity PLC

Significant diversification

The 3 months correlation between Flow and Gfinity is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders NV and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC and Flow Traders is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Flow Traders NV are associated (or correlated) with Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of Flow Traders i.e., Flow Traders and Gfinity PLC go up and down completely randomly.

Pair Corralation between Flow Traders and Gfinity PLC

Assuming the 90 days trading horizon Flow Traders NV is expected to generate 0.21 times more return on investment than Gfinity PLC. However, Flow Traders NV is 4.86 times less risky than Gfinity PLC. It trades about 0.01 of its potential returns per unit of risk. Gfinity PLC is currently generating about 0.0 per unit of risk. If you would invest  2,140  in Flow Traders NV on October 9, 2024 and sell it today you would earn a total of  36.00  from holding Flow Traders NV or generate 1.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Flow Traders NV  vs.  Gfinity PLC

Flow Traders NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Flow Traders is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gfinity PLC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gfinity PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gfinity PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flow Traders and Gfinity PLC

The main advantage of trading using opposite Flow Traders and Gfinity PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Traders position performs unexpectedly, Gfinity PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gfinity PLC will offset losses from the drop in Gfinity PLC's long position.

The idea behind Flow Traders NV and Gfinity PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.